Are Texas Independent Contractors Due Unpaid Overtime?

Are Texas Independent Contractors Due Unpaid Overtime?

Employers continue to believe that merely because a person is labeled as an independent contractor, he or she is not entitled to unpaid overtime. Under the Fair Labor Standards Act (which is referred to by non-lawyers as the Fair Labor Act or the FLSA Act, but will be referenced here as the FLSA), which governs unpaid overtime in Texas, workers that qualify as bona fide independent contractors, rather than employees, are exempt from overtime pay. But the test for determining when a person is truly an independent contractor as opposed to an employee is complex, and this gray area is often exploited by employers to short workers on overtime pay. This post will review the factors used to assess a worker’s employment status for the purposes of unpaid overtime.

Employers sometimes set up sham independent contractor relationships in an attempt to circumvent the FLSA’s unpaid overtime requirements. Other employers claim that merely designating their workers as independent contractors will allow them to avoid paying overtime. However, the U.S. Department of Labor has drafted position papers and federal courts across the country have crafted caselaw that provide guidance for evaluating whether a worker’s relationship is that of an employee or an independent contractor.

The legal test for assessing whether a worker is a true independent contractor (and thus not entitled to overtime pay under the FLSA) is known as the “economic reality test.” This test focuses on the following factors:

  • The extent to which the services rendered are an integral part of the principal’s business;
  • The permanency of the relationship;
  • The amount of the alleged contractor’s investment in facilities and equipment;
  • 
The nature and degree of control by the principal;
  • The opportunities for the worker to experience profit and loss; and
  • The amount of initiative, judgment, or foresight exercised by the individual.

No single factor is controlling – instead, courts examine the totality of the relationship between the employer and the worker. However, it is clear that the more dependent the worker is on the employer, the more likely the worker will be classified as an employee, and thus entitled to overtime pay.

Unpaid Overtime in the Construction Industry

The Department of Labor has stated that the construction industry is rife with employers who misclassify workers as independent contractors to avoid overtime pay. Below is a list of only a few of the many construction jobs that may be erroneously classified as independent contractors but may instead be employees entitled to overtime pay: Carpenters; Carpetlayers; Electricians; Heavy equipment operators; Ironworkers; Landscapers; Laborers; Plumbers; Pipefitters; Roofers; Sheetmetal workers; Stonemasons; and Welders.

Unpaid Overtime in the Oil and Gas Industry

Another industry in which workers are frequently misclassified to avoid paying overtime is the oil and gas industry. Without question, there are hundreds if not thousands of workers in the Barnett, Eagle Ford and Haynesville Shale  plays that are being misclassified and denied the overtime pay they are owed under the FLSA.  Below is a list of only a few of the many oil and gas jobs that may be erroneously classified as independent contractors but may instead be employees entitled to overtime pay: Oilfield laborers; Roustabouts; Electricians; Mechanics; Equipment operators; Wireline operators; Maintenance technicians; Well testers; and Pumpers.

If you are in the construction or the oil and gas industry and are working more than forty hours per week without receiving overtime pay, you may be entitled to thousands of dollars in unpaid overtime, and an equal amount in liquidated damages.

About the Author: I represent individuals in a variety of matters, including employment claims for lost wages.  While my office is located in Fort Worth, I am admitted to practice in every state and federal court in Texas, and I am able handle unpaid overtime cases in Dallas, Fort Worth, Denton, Houston, Waco, Austin, San Antonio, and across Texas.  If you believe you may be owed unpaid overtime, call me at 817.908.9861 or fill out my contact form for a free evaluation.

Author: Josh Borsellino

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